Examine the following list of "risks." Determine which of these are "pure risks."
I. The risk that your antique Corvette will depreciate in market value
II. The risk that you will have a collision in your Corvette, thus causing you to spend thousands of dollars in repair costs
III. The risk that someone will steal your Corvette
IV. The risk that you will buy a house and lightning will strike your roof, thus causing you to have to purchase a new roof
V. The risk that you will invest your life savings in a business venture that fails, thus causing you to lose your entire investment
A) I, II, III, IV, and V
B) I, II, and IV
C) I, II, III, and IV
D) II, III, and IV

Question

Examine the following list of "risks." Determine which of these are "pure risks."
 I. The risk that your antique Corvette will depreciate in market value
II. The risk that you will have a collision in your Corvette, thus causing you to spend thousands of dollars in repair costs
III. The risk that someone will steal your Corvette
IV. The risk that you will buy a house and lightning will strike your roof, thus causing you to have to purchase a new roof
V. The risk that you will invest your life savings in a business venture that fails, thus causing you to lose your entire investment
A) I, II, III, IV, and V
B) I, II, and IV
C) I, II, III, and IV
D) II, III, and IV

Quizplus · Accepted Answer

Pure risks involve only the chance of loss or no change; there is no opportunity for gain. II (collision), III (theft), and IV (lightning damage) are examples of pure risks as they only involve the possibility of loss. I (depreciation) and V (investment failure) involve speculative risks, where there is a chance of loss or gain.

Examine the Following List of "Risks